Lennar Homes delivered 6765 homes during the first quarter of 2018, the first fiscal quarter capturing a portion of the CalAtlantic acquisition. New orders at Lennar jumped 30% with a dollar value of $3.4 billion. After absorbing CalAtlantic Homes, the combined company now boasts a backlog of 17,566 homes with a combined value of $7.7 billion. Contributing to that huge backlog were 7190 homes from CalAtlantic worth an estimated $3.6 billion.

Lennar is now America’s largest home builder looking at the total dollar value of homes. We’ll have to wait for 2nd quarter results fully incorporating the recent acquisition to compare total unit deliveries and new orders, to obtain an accurate comparison to D.R. Horton. Horton has a lower average selling price than Lennar, and CalAtlantic only boosted those average selling prices for the combined operations.

Lennar’s first quarter was decidedly better than KB Homes first quarter, which reported flat deliveries for the three months ended February 28, 2018. KB has been going it alone for quite some time, and here in Texas the focus on affordable homes has kept the company busy competing with the likes of LGI Homes and D.R. Horton’s Express Homes product line.

New home builders enjoyed an impressive run-up leading for the past couple of years leading into 2018. With the Fed now raising interest rates and pulling away the punch bowl, it will be interesting to see how new home construction fares. So far new home sales growth has been tempered in 2018 even though prices have climbed. January and February were relatively flat in terms of U.S. new home sales.

Here in North Texas, things are a bit better with new home sales still going strong. NTREIS data showed a 12 percent increase in new home sales in the DFW area in February, and March sales growth looks to be strong as well. Average new home prices in the DFW area have actually declined in the Dallas Fort Worth compared to the first quarter of last year, providing a cogent reminder of what is likely going to be a continuing theme in the new home market. If builders are going to maintain sales growth, they will need to build more affordable homes. With higher mortgage interest rates, there is a lid on what consumers can actually afford, now matter how much “pent up demand’ and “buyer interest” they may be selling.

Lennar’s first quarter was a solid start to 2018, but it remains to be seen if the combined company will be able to deliver more affordable housing product into the market. The central bank bubble that inflated the DFW housing market is beginning to deflate, and Lennar will have to adjust accordingly along with every other new home builder.